International Federation of Consulting Engineers Session 10: Integrity/Corruption Dr. Jorge Díaz Padilla

Framework

As project delivery turns more complex, sustainability, quality and integrity become critical. Document harmonisation and transparency are solid steps to combat corruption. However, sustainable solutions need to involve all stakeholders. Framework

FIDIC Tools for Integrity Management

FIDIC believes that a scalable approach is the roadmap for the future of integrity systems and that alternatives for the design of an IMS should take into account the size, capacity and specific needs of each company. The FIDIC Integrity Management System

Part I of the FIMS Guidelines (2011)refers to a set of integrity management policies and principles that should be adopted by all firms. The FIDIC Integrity Management System

Zero tolerance toward bribery, extortion, coercion, fraud, collusion and conflicts of interest. Member firms should formulate and subscribe to an internal “Code of Conduct”. Member firms should develop and implement their own FIMS. The FIDIC Integrity Management System

Part II of the FIMS Guidelines (draft)explores various ways that may be used to develop an Integrity Management System. The FIDIC Integrity Management System Procedures

The scope and details of the FIMS procedures will vary from company to company and must be tailored to the specific needs of each firm. The FIDIC Integrity Management System

The particular details of a FIDIC Integrity Management System (FIMS) will vary for every company but the general structure will be the same. Implementing a FIMS

The firm will have to identify the critical projects with high potential corruption risk that need to be monitored depending on: (1) geographical coverage; (2) perceived corruption; (3) type of client; (4) type of contract; (5) subcontractors, etc. Implementing a FIMS

“FIMS light” might be quite appropriate for small to medium size firms that deliver projects in a low risk environment. The FIDIC Integrity Management System

“FIMS comprehensive” might be designed to be equivalent to a full flown FCPA or Bribery Act Compliance System. The FIDIC Integrity Management System

Contracts

The FIDIC “Model Representative Agreement” (2012) is designed for firms who engage an “agent” to develop business or provide assistance in a foreign country. The Rep Agreement

Clause 15 Anti-Corruption Sub-Clause 15.1 (a) The Representative hereby represents, warrants and covenants that it will not participate, directly or indirectly, in bribery, extortion, fraud, deception, collusion, cartels, abuse of power, embezzlement, trading in influence, money laundering, or any other criminal activity. The Rep Agreement

Clause 15 Anti-Corruption Sub-Clause 15.2 In conjunction with the requirements under Sub-Clause 15.1, the Representative at the Consultant’s election, shall either: (a) demonstrate to the satisfaction of the Consultant, that it adheres to a documented Code of Conduct and associated compliance programme; or The Rep Agreement

Clause 15 Anti-Corruption Sub-Clause 15.2 (b) Confirm its specific agreement to the principles of the Consultant’s Integrity Policy Statement and the Consultant’s Code of Conduct by confirming annually in writing throughout the duration of the Agreement acceptance of the Particular Conditions. The Rep Agreement

Clause 15.2 of the “MDB Harmonised Contract” (2011) entitles the Employer to terminate the Contract if the Contractor: The MDB Harmonised Contract

(f) gives or offers to give to any person any bribe, gift, gratuity, commission or other thing of value, as an inducement or reward for: (i) doing or forbearing to do any action in relation to the Contract, or (ii) for showing or forbearing to show favour or disfavour to any person in relation to the Contract. The MDB Harmonised Contract

Sub-Clause 15.6 Corrupt or Fraudulent Practices If the Employer determines, based on reasonable evidence, that the Contractor has engaged in corrupt, fraudulent, collusive or coercive practices, in competing for or in executing the Contract, the Employer may terminate the Contract. The MDB Harmonised Contract

Sub-Clause 15.6 Corrupt or Fraudulent Practices Reciprocity and the role of “Dispute Boards” need to be reviewed by the MDBs and taken into account. The MDB Harmonised Contract

Integrity Management at a cross roads

The Humboldt-Viadrina School of Governance recently (2012) applied a global survey on anti- corruption incentives and sanctions to a stakeholder group from business, the public sector and members of civil society. Framework

Key finding: “92% of respondents agreed that preferential treatment should be applied to companies that demonstrate adherence to anti- corruption principles” (e.g. grant preferred supplier status). The Humboldt-Viadrina Survey

Key finding: “73% of respondents agreed that independent third-party assurance of a business’ anti- corruption program is needed to grant incentives”. The Humboldt-Viadrina Survey

International Federation of Consulting Engineers Thank you for your attention